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The New VAT Registration Threshold & Introduction of New Duties in UK - A Guide for Business & Professionals.

With the recent Budget announcements, there's a lot to digest in the world of indirect taxes for UK businesses and professionals. Here's a simplified and short breakdown that's easy to grasp, focusing on key changes and what they could mean for you.

The UK government has introduced several changes to indirect taxes that are crucial for businesses and accountants alike. Let's unravel these updates:

  1. VAT Registration Threshold Increase: Starting April 1, 2024, the VAT registration threshold will rise from £85,000 to £90,000 and deregistration limit from £83,000 to £88,000. This adjustment, the first since 2017, means over 28,000 businesses could stay out of VAT registration, easing their administrative load and potentially affecting their cash flow positively.

  2. New Vaping Products Duty: A noteworthy introduction is the duty on vaping products effective from October 1, 2026. This move, alongside an increase in tobacco duty, aims to balance the financial incentive between smoking and vaping. Businesses will be able to register for the duty from 1 April 2026.

  3. Fuel and Alcohol Duty: The freeze on fuel duty continues, with the temporary 5p cut extended, providing relief against inflation. Similarly, alcohol duty sees a freeze, postponing the planned increase and maintaining current rates until February 1, 2025.

  4. Air Passenger and Landfill Tax Adjustments: Adjustments in air passenger duty aim to keep pace with inflation, especially for premium travellers. The landfill tax rates also see a revision, reflecting actual inflation rates to encourage more environmentally friendly waste management practices.

What This Means for You and Your Business?

  • These changes present both challenges and opportunities.

  • For business owners, understanding the nuances of these tax adjustments can lead to strategic financial planning and compliance.

  • These changes means that many will be exempt from the requirement to register for VAT until they reach the new, higher threshold.

  • This exemption could lead to significant savings in time and resources, as managing VAT can be complex and time-consuming.

  • It allows businesses to reinvest these savings into other areas, such as expansion, innovation, or hiring.


What This Means for Accountants and Financial Professionals?

  • The changes in the VAT registration threshold, introduction of new duties, and adjustments in fuel and alcohol duties present numerous opportunities for accountants and financial professionals.

  • They can guide businesses through these transitions, ensuring compliance while optimizing financial strategies.

  • The introduction of a vaping products duty, for instance, will require new registration and tax handling processes where accountants can offer expertise.

  • Additionally, the VAT changes create advisory opportunities, helping businesses understand when to register or deregister for VAT, thus affecting pricing, cash flow, and administrative burden.

  • These shifts also invite consultation services for strategic planning, especially for businesses approaching the new VAT threshold, navigating the implications of fuel and alcohol duty freezes, and adjusting to the new vaping product duties.

Let's embrace these changes as opportunities to build stronger, more resilient businesses and a fairer tax system. Together, we can turn these challenges into opportunities for growth and success.

To learn more about how these changes affect you and how we can assist, get in touch with us today.


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